Explainer: What Is New Hampshire’s “Adequacy Formula”?

Understanding New Hampshire’s Adequacy Formula in School Funding

By Granite State Report

New Hampshire’s school funding fights have a way of turning abstract math into very real pain: packed classrooms, aging buildings, and property tax bills that make homeowners grind their teeth.

At the center of all of it is a deceptively simple phrase: “the adequacy formula.”

It sounds technocratic. It is anything but. The adequacy formula is the main engine that decides how much money the State of New Hampshire sends to each public school district, to charter schools, and to families using Education Freedom Accounts (EFAs). It is also the mechanism the New Hampshire Supreme Court has now said — again — is not meeting the state’s constitutional duty to its kids. 

This explainer walks through what the adequacy formula is, how it works, what it pays for (and what it doesn’t), how recent court rulings have blown it up, and what might come next.

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A quick constitutional rewind: how we got an “adequacy” formula at all

New Hampshire didn’t voluntarily decide to run a complex school funding formula. It was dragged there by lawsuits.

In Claremont School District v. Governor (1993), the New Hampshire Supreme Court ruled that Part II, Article 83 of the state constitution puts a direct duty on the state — not towns — to provide a “constitutionally adequate” public education and to guarantee adequate funding for it. 

The Court followed up in Claremont II (1997), striking down the then-existing property-tax-based funding system and ordering the Legislature and governor to:

1. Define what an “adequate education” is;
2. Cost it out; and
3. Fund it with “equalized” state taxes rather than leaving it mostly to local property wealth. 

The Legislature eventually responded by:

• Writing a statutory definition of adequate education in RSA 193-E:2 and 193-E:2-a (English, math, science, social studies including civics, arts, world languages, health, PE, technology, etc.). 
• Creating a funding mechanism in RSA 198:38–40-d called the “Cost of an Opportunity for an Adequate Education.” That mechanism is what people now shorthand as “the adequacy formula.” 

Nearly three decades later, the Supreme Court is still saying: nice try, not enough.

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So what exactly is the adequacy formula?

The adequacy formula is the state’s main school funding formula. The New Hampshire Department of Education describes it as the state’s “primary state funding formula,” with three parallel versions: 

1. Traditional district public school adequacy
2. Charter public school adequacy
3. Education Freedom Account (EFA) adequacy

All three are based on the same core math written into RSA 198:40-a, titled “Cost of an Opportunity for an Adequate Education.” 

At its heart, the formula does two big things:

1. Calculates a dollar “cost” per pupil that the state says is enough to provide the opportunity for an adequate education (base grant + extra amounts for higher-need students).
2. Distributes that money to towns and districts as state “adequacy aid,” mostly funded from the Education Trust Fund and the Statewide Education Property Tax (SWEPT).

The problem, as several courts have now said bluntly: the number the Legislature chose bears little resemblance to what schools actually spend to do the job. 

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The core numbers: base aid and “differentiated” aid

Under current law for the biennium that began July 1, 2023, the formula in RSA 198:40-a says: 

• Base adequacy:
  • $4,100 per pupil in average daily membership in residence (ADMR).
• Differentiated aid (extra on top of the $4,100):
  • + $2,300 for each pupil who is eligible for a free or reduced-price meal anytime during the “determination year.”
  • + $800 for each English language learner (ELL) pupil.
  • + $2,100 for each pupil receiving special education services.

Earlier versions of the statute also included a smaller amount (around $697.77) for each third-grade student not proficient in reading who didn’t already qualify for the other differentiated categories. 

There are also additional layers of aid created later, such as:

• Relief/fiscal capacity disparity aid: extra funding for communities with high poverty rates and/or low property values per pupil, codified in RSA 198:40-e and 198:40-g and adjusted by recent legislation like HB 1583. 
• Extraordinary need grants, which increase aid where free-and-reduced-price lunch eligibility is high and property values are low. 

But the crucial idea is simple:

Start with $4,100 per student, then add extra dollars for students who are low-income, English learners, or in special education, plus certain community-level add-ons.

What does that add up to in practice?

The New Hampshire School Funding Fairness Project estimates that, after you factor in all state “adequacy” line items, the state is providing roughly $4,800–$5,100 per pupil on average, while actual average spending per pupil in New Hampshire public schools is about $20,000. 

In other words, the adequacy formula, as funded today, covers roughly a quarter of what districts actually spend. Local property taxpayers are doing the rest.

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How the money flows: from statute to your local tax bill

The concrete mechanics look like this:

1. Count the students. The state uses average daily membership in residence (ADMR) — roughly, how many resident students a district is responsible for over the year. 
2. Apply the formula. For each district or municipality, the Department of Education calculates:
   • Base aid: ADMR × $4,100
   • Plus differentiated aid:
     • (FRL ADMR × $2,300)
     • (ELL ADMR × $800)
     • (SPED ADMR × $2,100)
     • Plus any relief / disparity / extraordinary need grants triggered by poverty and property wealth factors. 
3. Write the state check. That sum becomes the district’s state adequacy grant, paid out of the Education Trust Fund through RSA 198:41–42.
4. Backfill with property taxes. Districts then set local school tax rates to cover the gap between the state aid and their actual school budget, using both:
   • The Statewide Education Property Tax (SWEPT); and
   • Additional local education taxes.

Because the state’s share is small, over 70% of school funding in New Hampshire comes from local property taxes, one of the highest local shares in the country. 

That’s why the adequacy formula isn’t just a school issue. It’s a property tax issue, a rural-urban equity issue, and a constitutional issue all at once.

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Three adequacy formulas, three political flashpoints

The statute is one; the politics are three.

The Department of Education says adequacy operates through three distinct channels: traditional district schools, charter schools, and EFAs. 

1. District public school adequacy

For traditional public districts, the state simply sends the adequacy grant to the district, which then spends it as part of its budget. The formula is applied based on students the district is responsible for educating, whether they’re in district schools, tuitioned to another district, or placed elsewhere under special arrangements. 

2. Charter public school adequacy

Charter schools do not levy property taxes. Instead, the state pays them a per-pupil adequacy amount, using the same base and differentiated aid but often with an additional charter grant on top to address their lack of local tax support. A 2024 Department of Education report shows charter per-pupil state adequacy calculations using the $4,100 base plus differentiated aid and additional charter grants. 

3. Education Freedom Account (EFA) adequacy

EFAs are the newest flashpoint. Under RSA 194-F, eligible students can receive state adequacy money into an account to spend on private school tuition, homeschooling expenses, and other approved educational costs. 

By law, the per-pupil EFA grant is literally the adequacy formula amount that would have gone to the student’s public school:

“The commissioner… shall transfer to the scholarship organization the per pupil adequate education grant amount under RSA 198:40-a, plus any differentiated aid that would have been provided to a public school for that eligible student.” 

As of 2024, legislative fiscal notes estimate the average EFA grant at about $5,200 per student, compared with an estimated average adequacy grant to public district schools of around $7,100 in FY 2026 once recent adjustments and extraordinary need grants are included. 

Critics argue that using the same under-funded adequacy amount to subsidize private and home-school options siphons limited state dollars away from public schools without first fixing adequacy itself. Supporters argue that EFAs extend the adequacy promise to families directly and increase choice.

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The big legal bomb: ConVal and the 2025 Supreme Court ruling

If you want to understand why the adequacy formula is under a microscope right now, you have to look at a different district: Contoocook Valley (ConVal).

In 2019, ConVal and several other districts sued the state, arguing that the adequacy amount — then about $3,708–$3,786 per pupil — didn’t come close to covering the cost of even the stripped-down statutory definition of an adequate education. 

In 2023, Rockingham Superior Court Judge David Ruoff issued a detailed ruling finding that the existing $4,100 base adequacy grant was unconstitutional, and setting a minimum constitutional base of $7,356.01 per pupil based on evidence of actual costs. 

He called $7,356.01 a “conservative minimum threshold” — and said the true cost was likely higher. 

The state appealed. On July 1, 2025, the New Hampshire Supreme Court handed down its long-awaited decision in ConVal v. State and sided with the districts:

• The Court held that New Hampshire is underfunding its constitutional obligation, and that the current adequacy formula is unconstitutionally low. 
• It accepted Ruoff’s $7,356.01 figure as the minimum base adequacy amount, rejecting the Legislature’s much lower number. 
• But it did not order an immediate increase or specify an implementation date. Instead, it threw the problem back to lawmakers, saying it is the Legislature’s job to fix the formula and increase funding. 

To recap:

The state’s own courts have now said, in effect:

“You chose a base adequacy number. It’s too low by at least 75–80%. Fix it.”

Meanwhile, the statutory formula still says $4,100 as the base per-pupil cost, with modest yearly 2% increases built in, and pending bills in 2024–25 would raise it only into the $4,400 range — nowhere near $7,356. 

That gap between statute and constitutional minimum is now the central political problem.

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SWEPT, Rand, and the property tax side of the equation

The adequacy formula doesn’t live alone. It sits on top of the Statewide Education Property Tax (SWEPT), created in 1999 in response to Claremont as a supposedly uniform state tax whose proceeds help fund adequacy aid. 

Two things matter here:

1. Property-rich towns often raise more SWEPT than their “adequacy” obligation and get to keep the excess, effectively lowering their local tax bills.
2. Property-poor towns do not, and rely more heavily on local education taxes on much lower property values.

In Rand v. State, property owners challenged SWEPT on constitutional grounds. Judge Ruoff initially agreed, finding the current administration of SWEPT unconstitutional and linking it to the same adequacy underfunding issues. 

But in June 2025, the Supreme Court reversed him on SWEPT, holding that the way the statewide tax is collected is constitutional, even if the overall funding system still produces wildly different effective tax rates. 

The net result:

• The Court says SWEPT is legally acceptable,
• But the adequacy formula itself is not,
• Leaving the heavy property-tax reliance intact while demanding that the state increase adequacy aid.

Without major reform, that likely means a combination of: higher state revenue, rebalanced grants, and potentially even higher local taxes in some places.

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What do researchers say the formula should look like?

When you strip away the politics, there’s a straightforward technical question:

“What does it actually cost to provide an adequate education to different students in different communities?”

A 2020 study by the Carsey School of Public Policy at UNH, titled Equity and Adequacy of New Hampshire School Funding: A Cost Modeling Approach, tried to answer that. 

Key takeaways from that work and related research:

• Adequate funding isn’t a single flat number. Costs vary with student needs (disability, language, poverty), district size, rurality, and wage differences.
• New Hampshire’s formula does include some of these “cost factors” (FRL, SPED, ELL, high-poverty concentration), but the dollar amounts are “relatively meager” compared with actual cost differences. 
• Even with adequacy and differentiated aid, most revenue still comes from local property taxes, leaving low-wealth communities at a structural disadvantage. 

The Carsey team’s model, like Ruoff’s later ruling, essentially concluded that:

• The base adequacy amount is too low,
• The weights for student need are too small, and
• The system lacks robust adjustments for district fiscal capacity (ability to raise money locally).

That’s technical code for: the math is wrong in ways that consistently hurt poorer towns and higher-need students.

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How lawmakers are trying (and not really managing) to fix it

After the 2023 Ruoff decision and ahead of the 2025 Supreme Court ruling, lawmakers began introducing bills to tweak adequacy:

• HB 1583 (2024) would raise the base per-pupil amount from $4,100 to about $4,404 starting in FY 2026, and restructure relief and disparity aid. 
• HB 563 (2025) and similar proposals aim to edge the base up again from $4,100 to around $4,266, with small increases to differentiated aid categories. 
• HB 550 (2025) is the bold one: it would directly adopt Ruoff’s $7,356.01 base amount into statute, and keep the existing differentiated aid on top. 

From a strictly mathematical standpoint:

• Bills like HB 1583 and HB 563 are tweaks — politically easier, but constitutionally dubious given the Supreme Court’s explicit endorsement of $7,356 as the minimum.
• HB 550 would align the statute with that minimum but carries an estimated state cost increase of over $500 million per year, depending on how it’s implemented. 

You don’t need a PhD in public finance to see the collision course:

Either the state raises a lot more money, changes who gets what, or both.

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So what does the adequacy formula actually do right now?

Putting it all together, here’s the blunt version as of late 2025:

• The adequacy formula still defines “cost” at about $4,100 per base pupil, plus modest differentiated aid and relief grants, ticking up 2% annually. 
• Courts have now said the constitutionally required minimum base is at least $7,356.01 per pupil — nearly double the statutory base. 
• The average total state adequacy aid per pupil is still in the $4,800–$5,100 range, while districts spend around $20,000 per pupil. 
• Local property taxpayers cover the rest, with higher rates in low-wealth towns. SWEPT is constitutional, but doesn’t fix inequities in effective tax burdens. 
• The same adequacy math underpins charter school funding and Education Freedom Account grants, making underfunding of the base number ripple across the entire education landscape. 

Bottom line:

The adequacy formula functions right now as a floor that is too low to stand on. The courts have confirmed that. The Legislature hasn’t yet raised the floor to where the courts say it has to be.

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Related YouTube videos for deeper context

If you want to watch the adequacy fight instead of just reading about it, these are solid starting points:

1. NH DOE training: FY23 Statewide Education Property Tax & Adequacy Formula
   • Official walkthrough from the Office of School Finance on how the formula and SWEPT work for districts.
   • YouTube: https://www.youtube.com/watch?v=TsUH-FEOQRM 

These are as close as you’ll get to sitting in on a graduate seminar in New Hampshire school finance, with pictures, graphs, and humans arguing about them.

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Why the adequacy formula matters more now than ever

The adequacy formula is not just a spreadsheet problem for school business administrators. It’s a live constitutional fault line:

• For students, especially in lower-wealth and rural districts, the underfunded formula means fewer staff, older materials, and fewer opportunities — even when the law promises otherwise. 
• For local taxpayers, it means some towns paying much higher effective tax rates just to deliver the same (or often less) educational opportunity than wealthier communities with broader property bases. 
• For state government, it’s now a direct order from the Supreme Court: bring the numbers in RSA 198:40-a up to constitutional snuff — meaning at least $7,356 per student in base aid — or continue violating the Constitution. 

The current version of the adequacy formula does some important things right: it recognizes that students with higher needs cost more to educate, and it provides some extra aid for poor communities. But the scale of the dollars is out of sync with reality, and the courts have finally said that out loud.

Whether New Hampshire answers that with incrementalism or a serious overhaul is now the central policy question — for legislators, for the governor, and for every voter who cares about both property taxes and public schools.

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References:

• Baker, B., Kolbe, T., Levin, J., et al. (2020). Equity and Adequacy of New Hampshire School Funding: A Cost Modeling Approach. Carsey School of Public Policy, University of New Hampshire. 
• Claremont School District v. Governor, 138 N.H. 183, 635 A.2d 1375 (N.H. 1993); subsequent decisions summarized in FindLaw, Casemine, and Wikipedia entries. 
• Contoocook Valley School District (ConVal) v. State of New Hampshire – Superior Court decision excerpts and analysis via NH Business Review, NH School Funding Fairness Project, and Fair Funding NH press materials. 
• Education Law Center. (2025, July 30). New Hampshire Supreme Court Rules State Violated Constitution by Underfunding Public Schools. 
• New Hampshire Department of Education. State Adequate Education Aid and State Adequacy Aid Funding pages; Adequacy Grants Explained FY 2023/2024. 
• New Hampshire Department of Education. (2024). Charter School Aid Per Pupil FY 24 and 2024 Final Charter Report. 
• New Hampshire Department of Education. Education Freedom Accounts program description. 
• New Hampshire General Court. RSA 193-E:2 and 193-E:2-a (definition and substantive content of an adequate education); RSA 198:38–40-g (Cost of an Opportunity for an Adequate Education and related aid); RSA 194-F (Education Freedom Accounts). 
• New Hampshire HB 1583 (2024), HB 563 (2025), HB 550 (2025), HB 603 (2025), SB 295 (2025): bill texts and fiscal notes via LegiScan and General Court bill texts. 
• New Hampshire Public Radio. (2023–2025). Coverage of school funding formula debates, including:
  • “New school funding formula, teacher recruitment grant part of latest state budget proposal.” 
  • “NH Supreme Court: State falls far short on school funding, but leaves fix to Legislature.” 
  • “NH Supreme Court rules statewide education tax is constitutional.” 
• New Hampshire Bulletin. (2025). Coverage of Rand and ConVal rulings and prior Ruoff decisions. 
• New Hampshire School Funding Fairness Project. School Funding explainer, ConVal lawsuit timeline, and legislative previews/testimony. 
• NH Journal, InDepthNH, Concord Monitor, Josiah Bartlett Center for Public Policy: analysis and commentary on the ConVal and Rand rulings and their fiscal implications. 
• WMUR-TV. (2025). News reports on ConVal and Rand decisions and CloseUp segment on school funding debate. 

That’s the adequacy formula in New Hampshire: a legal promise, a spreadsheet, and — at the moment — a constitutional problem waiting for a political answer.